What are the key indicators of supply chain disruption you should monitor?

Key inventory management KPIs include: 1. Inventory Turnover Ratio:Measures how often inventory is sold and replaced. High turnover indicates efficiency. 2. Days Sales of Inventory (DSI): Average days to sell inventory. Lower DSI is better. 3. Stockout Rate: Frequency of out-of-stock items. High rates signal poor planning. 4. Backorder Rate: Percentage of unfilled orders due to insufficient stock. 5. Carrying Cost of Inventory: Total holding costs. Helps in pricing and inventory decisions. 6. Order Accuracy Rate: Correctly fulfilled orders. 7. Lead Time: Time to receive goods from suppliers. 8. Fill Rate: Customer demand met without stockout. 9. Safety Stock Level: Extra inventory to prevent stockout.

Disruption could be in form of, Sudden Increases: Inventory levels that spike unexpectedly can signal disruptions upstream. This could be due to companies stockpiling in anticipation of shortages, or a backlog caused by production issues or transportation delays. Sharp Dips: Conversely, a sudden drop in inventory levels might indicate unmet demand due to disruptions. This can lead to stockouts and lost sales. Both of these are fatal for an organization as it would be disrupting the entire business cycle and leading to financial losses, therefore maintaining an adequate level of inventory is essential.

Key indicators of supplier health include: 1. Lead Times: Measure the time taken for suppliers to deliver goods. Increasing lead times may indicate potential disruptions. 2. Quality of Goods Received: Consistently high-quality products are crucial. A decline in quality can signal problems with the supplier's processes or materials. 3. Financial Stability: Assess the financial health of suppliers. Financial instability can lead to supply chain disruptions. Monitoring these indicators helps assess the risk of supplier reliance and determine if you need to diversify your supplier base or develop contingency plans.

Key indicators of freight cost changes include: 1. Fuel Prices: Fluctuations in fuel prices can significantly impact freight costs. 2. Carrier Rates: Changes in rates set by transportation carriers can indicate cost shifts. 3. Transportation Availability: A shortage of transportation options, such as limited truck or ship availability, can drive up costs. By monitoring these indicators, you can identify trends that may affect your supply chain's efficiency and cost-effectiveness, allowing you to make informed decisions about logistics and transportation strategies.

Key indicators of on-time delivery performance include: 1. Delivery Schedule Adherence: Percentage of deliveries made on or before the promised date. 2. Production Bottlenecks: Frequency and duration of delays in the manufacturing process. 3. Logistic Inefficiencies: Rates of transportation delays, warehousing issues, and handling errors. 4. Customs Holdups: Frequency and duration of delays at customs checkpoints or due to regulatory compliance. By monitoring these indicators, you can identify and address issues promptly, ensuring timely deliveries and maintaining customer satisfaction and trust.

Key indicators for demand forecasting accuracy include: 1. **Forecast Accuracy:** Measure the percentage or absolute value of variance between forecasted and actual demand. 2. Historical Data Analysis: Review past forecasting performance to identify patterns and trends in forecasting errors. 3. Market Trends and Consumer Behavior: Monitor changes in market conditions and consumer preferences that could affect demand. 4. Data Quality: Assess the accuracy and completeness of data used in forecasting models. By tracking these indicators, businesses can improve their demand forecasting processes, minimize inventory costs, reduce stockouts, and enhance overall supply chain efficiency.

Data accuracy and end to end visibility is also very critical in Supply Chain. Digitization in day to day operations is key to improve operational efficiency as well. RPA and AI may also have a huge impact on day to day operations and decision making in Supply Chain. The next challenge will be how quickly we can adapt to technological developments in Supply Chain world.

Apart from what is mentioned in my view one of the most critical indicator is technology.... By Technology I mean how well we have integrated our systems using ERP for our better planning and ordering cycles. This also is an important factor to consider because every organization is working towards efficient and effective supply chain but its important that their Human resource and technology are also well align and trained to make that supply chain a success...